What I Think Tank

Here We Go Again! Recession 2.0 = A New Great Depression

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A couple of years ago the recession struck and everyone were paralyzed. When I say “everyone”, I of course only mean the mainstream nitwits. There were enough of those who warned about the imminent collapse. It was coming, and sure as hell it did.

It didn’t, of course, end there. The same people who warned us first time around also warned that if central authorities would continue what they were doing, we were sure to face something much worse very soon. Of course the wise overlords in Washington didn’t listen, and the FED has been forking out those dollars like never before. Needless to say, it hasn’t been working, and the day the world would realize this were coming at any time.

Well, ladies and gentlemen, that time might be right ahead of us as we speak. People with the Austrian School and people who identify with it are in strong opposition to mainstream economists and the FED, saying the response after the recession was the wrong one, and that we are not at all recovering from the financial crisis. All the measures by Washington merely dulled the pain temporarily, and the phoney recovery will plummet to earth in the near future.

It seems like that near future may very well be very near, indeed. As explained by Goldsilver.com, associated with The Wealth Cycle Principle and Mike Maloney, the decline in the banking sector was setting the stage for the recession. It was an early warning sign that a crash was ahead. Those with a broad and correct understanding of economics saw this pattern fall together with what they see as a system built to fail and warned that we were facing an economic crisis.

Today’s economy is overwhelmingly driven by borrowed money.  Whether it is a home mortgage, car loan or simply a nice dinner put on a credit card, in a credit based economy (like we absolutely have today) this bank credit is what makes the economic wheels turn.  If the banks aren’t doing well enough to loan aggressively, not as many loans are made and the economy slows.  So the banking sector is a very important part of our economy to keep a close eye on.

Apparently, the banking sector is showing the same warning signals as it did many months before the last recession.

Even though the stock market has had a nice bounce, the bank stocks are not keeping up with this stock bounce. Compare the charts above again and notice the bank versus S&P 500 chart has bounced along sideways since summer of 09 and have not confirmed the S&P 500 bounce.  Unless the banks join the party quickly we should be in for another very serious round of stock declines or a crash.

Looking back on the article I wrote on President Obama and the coming ’12 election, I was wondering if the central authorities in Washington would be able to push the coming depression enough ahead of them to secure a victory. Well, the next year will be a very exciting one. Will the markets crash before election day or not? What will the FED do with these glooming warning signals? They were rumored to end QE2 over summer, but how is that even likely when things are starting to take a turn for the worse?

When politicians give us a second recession, one facepalm is not enough.

The false recovery was just that; False. It was doomed from the start, but those who thought “we have to do something” and others who currently think “we have this under control” are all missing the very obvious point: You cannot shape the future by your will alone. You lack the tools to know what’s right at all times. Government can only spend stolen money, and the FED can only print new ones. They know nothing about creating businesses; keeping productivity; meet market demands or dealing with constant government regulations.  What is the ultimate outcome by both these actions? They waste resources and place the burden on those who will inherit the system a few years down the line – ultimately the people, under the pretense of helping them. They can only steal resources, destroy savings and weaken the dollar, all of which are detrimental to economic recovery and the prosperity of the ordinary men and women in America.

What do I think? I think the FED will continue with a QE3 and 4, and it seems like others agree. Gloom and doom is ahead, and there will be more stimulus packages. Will the New New Deal perhaps even nationalize banks and private institutions, as proposed by everyone’s best friend, Paul Krugman? Certainly, if President Obama were to win the next election, I’d say the answer may very well be “yes”. The recession never ended. The depression is upon us. You would do well in securing those silver coins while you still can. If not only securing you current savings, it might even earn you a good deal of money as precious metals shoot towards the sky as everything else fall apart. And it might make life a lot easier too, cause I’ve heard it’s bothersome to fill the backpack with paper money when going to the store to buy a piece of bread. Especially when the price has risen to two backpacks since yesterday. You might want the silver coin at that time; the silver coin that says “1 dollar”, but will end up being worth more than a billion of them if hyperinflation kicks in. Ask some people in Zimbabwe. They can probably testify to that.

Yes, there are exciting times ahead. Exciting, but frightening too. The coming presidential election just got that much more important. Do me a favor, Americans: please vote Ron Paul, will you? Thanks.

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